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Second Industry Meeting Hosted by the Federal Reserve Bank of New York

NEW YORK - The Federal Reserve Bank of New York today hosted a follow-up meeting with representatives of major market participants and their domestic and international supervisors to discuss the progress that has been made to date in addressing a range of issues regarding the processing of credit derivatives.

The industry group has fulfilled commitments outlined in their letter of October 4, 2005 to improve the infrastructure that supports the credit derivatives markets. Specifically, industry participants have been able to:

implement the new ISDA protocol for the novation of trades,

increase the use of electronic processing of confirmations,

reduce the backlog of trades that are unconfirmed, and

work towards improving the credit default settlement process

All 14 major dealers have met the January 31, 2006 commitment to reduce by 30 percent the number of confirmations outstanding by more than 30 days. As a group, a 54 percent reduction was achieved by the end of January. Separately, virtually all active clients have been added to an industry-accepted electronic confirmation platform. This has facilitated an increase of total trade volume that is electronically confirmed from 46 percent in September to 62 percent in the month of January.

The industry group is committed to continue making progress in these areas and will submit a plan by month-end to improve confirmation processing times for credit derivatives over the next several months. The industry will outline a set of conditions that would define acceptable market practices for post-trade processing of OTC derivatives.

The Federal Reserve Bank of New York is encouraged by the progress made to date and the commitment of all participants to continue to work together on these important issues.